Managed Care Now; It Works : Health: An efficient system would save enough from Medicare to cover the uninsured.
The sound coming from Congress is that something must be done to reduce Medicare spending. One emerging strategy is to move more senior citizens into managed-care health programs. It makes good sense because it works.
Our health-care company serves 360,000 Medicare-eligible seniors and is the third largest health maintenance organization by membership in the country.
We save Medicare about $120 million annually. Half of this amount is in reduced administrative overhead for the government. The balance is because Medicare avoids paying more expensive fee-for-service physician charges.
The program works like this: The government calculates what it would spend for each Medicare beneficiary utilizing the fee-for-service system. Managed-care companies can then enroll Medicare members for 95% of this amount. We save Medicare $60 million annually because of the 5% difference in payments.
As members of my HMO, Medicare beneficiaries pay no premiums, no deductibles and no co-insurance. Benefits include routine exams, prescription drugs and, in most cases, optical and dental services. This saves each senior Medicare member about $1,200 a year, or a total of $432 million for all eligible members in the HMO, that otherwise would have been paid into a fee-for-service structure.
I am convinced that if the inefficiencies and waste in fee-for-service medicine for the elderly were eliminated, the country could save enough money to pay for the health care of all uninsured Americans.
Americans spend $1 trillion, 14% of our gross domestic product, on health care. Based on the experience of other major industrialized nations, we should be spending only $600 million to $700 million.
The key is to manage the system, and that is what managed-care companies do so well. One example: More than 240,000 Medicare patients are hospitalized each year for adverse drug reactions at an annual cost of $10 billion. One of the first steps we take with seniors is to encourage them to bring in all their prescriptions so we can discuss possible problems of drugs in combination. We work to avoid unnecessary, expensive emergency room visits.
Positive changes in our health-care system are being forged in the marketplace by the private sector. The health-care revolution started without Capitol Hill.
Membership today in managed-care health plans has topped 50 million. More than 45% of all insured Americans are projected to be served by managed health care within five years. In California, three-fourths of all privately insured patients are enrolled in HMOs. Why?
Quality. It must come first. Without quality care, there is no way HMO membership would have grown so dramatically. Eighty-five percent of all HMO physicians are board certified, compared to 61% of practicing physicians nationwide in 1993.
Cost. HMO costs are frequently 20% below standard insurers. We’ve been successful in wringing out tremendous inefficiencies and waste.
HMOs practice prevention, wellness. These are messages that are well-received since prevention can save money for everyone, not to mention pain diminished when diseases are treated early.
Within a decade, the American system of medicine, including Medicare, will be dominated by managed care. The trend is unstoppable. If we encourage and support this trend, we can meet the goal of universal coverage and provide basic health insurance for all Americans.
